Tag Archives: broadband adoption

Fabricated sales forecasts are a bad basis for handing out broadband “adoption” grants

by Steve Blum • , ,

The California Public Utilities Commission launched a new, $20 million taxpayer-funded broadband “adoption” program last year. It was included in the $330 million gift to Frontier and AT&T (and Comcast and Charter and…) that the California legislature approved in 2017. The CPUC isn’t setting a quantitative adoption target, and is simply acknowledging that “the number of subscriptions to broadband service has been growing annually in California and adoption will inevitably increase”. Instead, the program is built around digital literacy training, and free Internet access points and equipment.

The CPUC went through one round of adoption grant proposals this past summer. Changes to the program are proposed, based on lessons learned.

Even so, organisations still have to forecast the “number of new residential broadband subscriptions resulting from the project” in their grant applications and provide “a summary of subscriptions resulting from the project” in order to collect their money. That’s driven by the legislature – assembly bill 1665 requires the CPUC to report back on “the number of subscriptions resulting from the broadband adoption program” that’s paid for by the California Advanced Services Fund (CASF). The CPUC will look at other ways to measure broadband uptake, but demonstrating a causal link between that rising tide and CASF dollars is impossible.

The implication is that the more new subscribers an applicant forecasts, the better the chances of getting money, even though the CPUC’s guidelines don’t say that. At best, that approach will produce unobtainable estimates, at worst it’ll lead to fraud.

To make the program work, the CPUC should focus on credibility and reject applicants who give in to temptation and offer inflated sales projections. Instead, priority should go to applicants who are honest about their mission and have a verifiable track record of producing results based on the accepted criteria of their professions. A non-profit or government organisation that promotes its worthiness or measures its success on the basis of sales that have to be closed by others – by for-profit Internet service providers – should be viewed with skepticism, to put it politely.

Don’t confuse social services groups with ISP sales departments

by Steve Blum • , ,

It’s been a bad few weeks for so called broadband adoption programs in California. First, the shotgun marriage between Frontier Communications and the California Emerging Technology Fund (CETF) turned into a messy divorce, having only reached a tiny fraction of its “aspirational” target of 200,000 new broadband subscribers.

Then the California Public Utilities Commission launched an effort to recover $244,000 from a Los Angeles County adoption program, that was funded by a regional broadband consortia grant from the California Advanced Services Fund. That program had an even loftier goal: it was called California’s One Million New Internet User Coalition (NIU Coalition). A CPUC investigation resulted in allegations of “false reports” submitted by the group, regarding time spent – and billed – training residents of low income communities in the mysteries of the digital world.

These programs are intended to get more people to use Internet-delivered services and subscribe to broadband service. In theory, that’s what “adoption” means. It’s a marketing metric that’s expressed as the percentage of potential customers who buy a particular category of product or service. To increase the adoption rate, you need to close more sales. Period.

The problem is that the non-profit corporations and community based organisations that chase “adoption” grants are not well equipped to meet Internet subscriber sales quotas. Instead, they tend to focus on advocacy or education – digital literacy, as it’s sometimes called. Or they simply give computers and Internet access away. That might be worthy thing, but at best it’s an indirect way to drive broadband subscriptions.

Computer giveaways, free Internet access and digital literacy classes are not sales tools. Those sorts of programs play a role in connecting more people to Internet-delivered services and closing the digital divide. But you can’t measure their success by the number of new subscriptions they generate. Trying to do that just leads to acrimony when ridiculous targets aren’t met. There are better ways to hold educational and social services organisations accountable than by pretending they are the sales department for Internet service providers.

Broadband consortium accused of making “false reports”, CPUC wants $244,000 back

by Steve Blum • , , ,

The California Public Utilities Commission began funding regional broadband development groups, AKA broadband consortia, in 2011. In rural areas, and some urban areas, the groups primarily worked on expanding broadband infrastructure. But in Los Angeles County, the focus was on broadband promotion – AKA broadband “adoption” – programs that aimed at getting more people to use – and subscribe to – Internet service.

One of those groups styled itself “California’s One Million New Internet User Coalition”. It received conditional approval for a $450,000 grant from the CPUC and paid for by the California Advanced Services Fund (CASF), to run digital literacy training, primarily in low income communities in LA County. An organisation called Korean Churches for Community Development was in charge of the money – AKA, the fiscal agent – and, according to CPUC records, the consortium’s leader was Larry Ortega, CEO of Community Union Inc.

The CPUC doesn’t simply write checks, however. The CASF program generally reimburses grant recipients, including consortia, for money that is spent on approved activities, and properly documented. The NIU Coalition, as it’s sometimes called, made claims about millions of people reached that might have true – one news story on an LA television station gets a lot of eyeballs. But the training programs that the CPUC was paying for were a different matter. According to a report by CPUC enforcement staff, what the consortium actually did, didn’t match the reimbursement claims that it submitted…

The Coalition repeatedly made false claims to the Commission by reporting
that they provided 40 hours of instruction despite reducing instructions to 20
hours…the Coalition “gave the impression that the Consortium has been offering the 40-hour in-class training in all its quarterly reports and in its requests for Year 2 and Year 3 budgets.” The Coalition’s application and subsequent annual work plan submissions to the Commission all falsely claimed that they were still providing 40-hour training programs. The Coalition misled the Commission by making false reports.

The CPUC will vote next month whether to begin the formal process of clawing back $244,000 from KCCD, and possibly assessing fines and other penalties on it and Ortega. According to the CPUC, Ortega and KCCD have stonewalled them, and largely refused to respond to questions or demands to return the money.

I do a lot of work for regional consortia, some of it paid, some of it not. I’m proud of what I do, but not of some of the other crap that goes on. I’m not a disinterested commentator. Take it for what it’s worth.

California broadband adoption rate flat for 5 years

by Steve Blum • , ,

The in-home broadband subscription rate in California is the same now as it was five years ago, and the cost of service is the biggest barrier to adoption. That’s the top line result from an annual survey commissioned by the California Emerging Technology Fund. This year, the research was carried out by U.C. Berkeley’s Institute of Governmental Studies. It found that in 2017, 69% of Californian households are connected to the Internet via a “computing device”, which is the same rate as in 2013.

Another 18% of Californian households get Internet access “through a smart phone only”. That figure has gone up over the five years: in 2013, it was 6%.

Age, income and ethnicity matter. Homes surveyed where the “householder” is younger than 30 years old are well above the 69% average, with 78% reporting broadband access. On the other hand, Internet connectivity drops off sharply past age 65 – 60% for everyone 65 and older, and just 49% at 75 and older.

White households have a broadband take rate of 83%, which compares to Asian American and African American households at 64% and 63% respectively, and to Latino households, which have an overall adoption rate of 54% and just a 32% rate among Spanish speakers. Latinos are also far more likely to be limited to smart phone access only.

There’s a clear household income trend too – 48% of household where income levels are less than $20,000 a year have in-home broadband access, compared to 90% of households with income at $100,000 or more. Reliance on smart phones is likewise linked to income, with 27% of households with income of less than $20,000 relying solely on mobile service. That figure drops to 9% in homes where income is at $100,000 or more.

Price is the major reason people do not have broadband service in their homes. Of the Californians who don’t have connectivity, 69% cite cost as a factor and 34% say it’s the main reason. No other factor comes close. Only 12% say it’s because of technical difficulties or a lack of knowledge. That’s in line with other studies that point to service and equipment costs as the primary barrier to broadband adoption.

A smartphone is a poor, and the poor’s, choice for broadband

by Steve Blum • , , ,

If a smartphone was the killer Internet access solution that AT&T claims it is – usually when trying to divert attention from substandard or even non-existent wireline service in rural and inner city communities – then you’d expect to see something like an even spread of usage cases across demographic groups.

The Pew Foundation’s latest research shows that is clearly not the case.

Overall, 12% of U.S. adults own a smartphone, but do not otherwise use the Internet at home. A deeper dive into those numbers indicates, though, it’s not a matter of style or choice. Only 5% of high earners rely solely on a smartphone, while 21% of those in the lowest income bracket – less than $30,000 a year – do.

The gap is even bigger when education is factored in. Again, 5% of highly educated adults are smartphone-only, versus 27% of those without a high school diploma.

There is also stratification by age and race. Blacks (15%) are more likely than whites (9%) to be smartphone reliant, and latinos even more so (23%). Pew didn’t provide cross tabs, but I’ll speculate that if the numbers were broken out by income and education levels, those would be the significant factors.

The age spread is less, but still significant. Adults under 30 years old come in at 17%, while 7% of those 65 and up are in the smartphone-only category. Again, income and education levels are likely more determinative, but the basic gating question – does a person use the Internet or not? – is probably the main explanation for the gap. There’s a big age divide between those two age groups when it comes to Internet adoption – at home or on a smartphone – 99% versus 64%.

There’s no gender difference in smartphone-only rates – men and women are both at the overall average of 12%. There’s also no significant difference between urban and suburban (both 12%) and rural (14%) areas, although differences in availability were not factored into Pew’s numbers.

Some U.S. adults probably do rely solely on smartphones as a matter of choice, but the income and education gaps indicate that necessity – a simple lack of economic choice – is the real driver.

U.S. Internet use up, but age, income, education matter

by Steve Blum • ,

More people in the U.S. have broadband service at home than ever before, according to the latest numbers released by the Pew Foundation. After a couple of years where residential adoption dipped, it’s on the way back up, albeit unevenly…

Between 2013 and 2015, the share of Americans with home broadband service decreased slightly – from 70% to 67%. But in the past year, broadband adoption rates have returned to an upward trajectory. As of November 2016, nearly three-quarters (73%) of Americans indicate that they have broadband service at home. But although broadband adoption has increased to its highest level since the Center began tracking this topic in early 2000, not all Americans have shared in these gains. For instance, those who have not graduated from high school are nearly three times less likely than college graduates to have home broadband service (34% vs. 91%). Broadband adoption also varies by factors such as age, household income, geographic location and racial and ethnic background.

Overall, a record 88% of U.S. adults make use of the Internet, either at home or elsewhere. Again, that use is not evenly distributed throughout the population. Pretty much all adults younger than 30 years old – 99% – are connected, but less than two-thirds as many – 64% – of people 65 and older go online.

Income and education matter – there’s a clear drop from the 98% usage level among the highest earning and best educated adults to the 79% adoption rate among those in the lowest income category and 68% among the least educated. Where people live matters, too – urban and suburban residents are right around 90% mark, but rural Internet use is significantly lower at 81%.

On the other hand, race and gender don’t seem to be a factor according to the Pew study, at least from a top level analysis perspective. Men and women, and whites, blacks and latinos are within 3% of each other – all in the mid to high 80% range.

Cable broadband business grows while telco subs fade

by Steve Blum • ,

Cat videos included.

Overall growth in broadband subscriptions is slowing but is still in positive numbers in the U.S. That’s the conclusion of a tabulation by Leichtman Research Group. Looking at the fourteen largest cable and telco broadband providers, which account for “about 95% of the market”, the aggregate count grew by only 190,000 high speed subscribers in the second quarter of this year. According to Leichtman, that’s the lowest quarterly figure since they starting keeping track of Internet service providers fifteen years ago.

It’s not a fluke. The past seven quarters are the quarters with the lowest net subscriptions adds over those years.

A deeper dive into the numbers, though, shows that the bad news is mostly coming from telephone companies. Cable companies are still posting respectable growth figures. The seven on Leichtman’s list – Comcast, Charter, Altice, Mediacom, WOW, Cable One and Cox – added 523,000 high speed subs, which was “the most in any second quarter since 2008”.

That’s not bad for a quarter that’s known for heavier than average churn figures, although it’s about half of the one million net new subs cable gained in the first quarter of 2016. Over the last year, cable broadband subscriptions have grown by 3.5 million units.

People understand broadband, they just can’t always afford it

by Steve Blum • ,

Any questions?

In the I’ve been meaning to write about this file is the Pew Research report released last month that showed a dip in fixed home Internet access and a corresponding blip in mobile-dependent households. Overall, the report says the national consumer broadband adoption rate is staying steady at about 80% of homes. But at the margins, where cost is critical, more people are putting smartphones ahead of wired (or, presumably, fixed wireless) service.

Cost is also the issue for people who have no broadband service at all. The general value proposition is well understood. But the money isn’t there…

Roughly two-thirds (69%) of Americans indicate that not having a home high-speed internet connection would be a major disadvantage to finding a job, getting health information or accessing other key information – up from 56% who said this in 2010.

Among non-broadband adopters, 33% cite the monthly cost of service as the main reason they lack broadband at home, with an additional 10% citing the cost of a computer as their main reason for not having broadband service.

These changes are related: Non-broadband adopters who view a lack of home service as a major disadvantage are also more likely to cite the monthly cost of broadband as the primary reason they do not subscribe. Price sensitivity, in other words, is greatest among those who are most likely to see the advantages of a home broadband subscription.

The results are consistent with a Benton Foundation meta-study that also said it’s about the money, and a Federal Communications Commission experiment that showed that digital literacy classes – often mischaracterised as adoption programs – don’t produce more broadband subscribers.

It’s about the money. There are two ways to solve the problem: lower the cost – like, maybe more competition? Naw, that’d never work – or increase the personal value proposition.

If you want people to buy your stuff, make stuff they want to buy

by Steve Blum • ,

Churn.

The road to broadband nirvana has its ups and down. Adoption figures – the number of people who pay for regular broadband access – are on a general upward trend, despite a tremor in the latest Pew Research Center report. But the market is messy, and sometimes people who subscribe to in-home broadband service decide to drop it. Churn out, in industry jargon.

The Benton Foundation has crunched some existing survey numbers and concluded that the reasons people drop broadband subscriptions – become unadopters, as they put it – are mostly related to cost, with usefulness a distant second. According to their analysis…

In comparison with their “never-adopter” counterparts, un-adopters are significantly more likely to cite cost, the potential to use the Internet elsewhere, and the inadequacy of their computer as reasons for their discontinued use. In particular, our models show that households with incomes up to $40,000 are more likely to select “too expensive” as their reason for stopping service – suggesting that policies focusing on un-adopters may need to cater to more than very low-income households.

Translation: like every other commodity, demand for Internet access depends on price. But only 4% of U.S. households can be classified as former broadband subscribers, as opposed to 29% who have never bought it at all, as the Benton Foundation figures suggest. It’s a figure that’s in line with a service that’s not quite a necessity like electricity, but expendable in a particularly tight pinch, like phone or cable subscriptions.

Retirees, though, are likelier to cite “no need” as a reason for dropping home broadband. This is where the Benton Foundation’s analysis misses the boat completely. Its suggestion is to target them with “digital literacy/educational efforts that include strategies to assist those who do not feel Internet content and services are relevant to their lives”.

Reeducation camps designed to assist people with counter-revolutionary feelings enjoyed a brief resurgence after the fall of Saigon, but haven’t proven particularly effective since. How about creating services that are relevant? That’s the way to attract and, more to the point, keep customers.

Six Californias, six challenges drawn by broadband adoption map

by Steve Blum • , , ,

Overall, California’s broadband adoption rate isn’t bad, compared to much of the U.S. or other countries. That’s one of the many pieces of good news in a study released last week in conjunction with the announcement of a federal pilot program aimed at increasing broadband access in public housing. The map above shows the pattern, with dark green coastal areas doing best and the red south poorly.

One thing that struck me about the map, though, was that it also does a fair, if rough, job of outlining the six proto-states proposed last year by Silicon Valley entrepreneur Tim Draper in his failed quest to break up California. Whatever you think of his Six Californias initiative drive (or the silly names proposed for the new states), you have to give him credit for identifying critical economic gaps between regions.

The differences in broadband adoption rates highlight those gaps. If you’re on the coast, or near it, and between San Francisco and Los Angeles, you’re probably doing okay. You and your neighbors are more likely than most to be connected to the Internet and, more importantly, to the Internet economy. Those would have been the new states of Silicon Valley and West California (even though it’s east of most of the others).

Same story if you’re in the strip of counties that run from the Marin coast, east through Sacramento and on up into Mother Lode country. Draper wanted to call it North California; I think Boomerstan would have been more apt.

South California – San Diego and the Inland Empire – looks almost as good, both in terms of broadband use and the general economy (although the economic gap is probably bigger than the broadband picture would lead you to think).

The two relative failures are, as Draper drew it, Central California (the San Joaquin Valley and the east side of the Sierra) and Jefferson – the far north of the state (and the only name with any sense or sense of history behind it)).

California is still whole, but the whole is made up of distinct pieces. Improving broadband availability is important where ever you are, but it’s a different problem, with different solutions – and urgency – depending on which region you call home.